Posts Tagged ‘Budgeting’

Personal finance is called ‘personal’ for a reason. No matter what advice or best practices exist, money—how we earn, spend, and save it—is intertwined with our values, beliefs, and experience. By exploring not only the practical side but also the personal side, you will find that you not only can ‘find’ more money, but you’ll be happier because you’ve given your personal finances careful thought.

Knowing your goals and setting up a budget that works are the first steps in putting the personal in your finances. Once you know where your money is going and how much you’re spending you can challenge yourself and your family to reduce or eliminate unnecessary spending by examining what you’re spending through the filter of your goals.

Each expense should be evaluated and considered. Is it essential? Could it be reduced? Should we be ‘investing’ more in this area?

Let’s examine a few common areas where you may be able to find savings that can really add up:

Trivial Spending

Buying a cup of $3 coffee at work or spending $10 on lunch out with co-workers every week may not seem like a big deal, but it can add up…and fast! Spending $30/week on those little things can add up to over $1,500/year!

Tips to Manage Trivial Spending:
Choose intentional spending instead. If you know you are going to spend money on little thing it’s best to set a budget of yourself-or an allowance. Once you’ve spent your ‘allowance’ you will have to skip the little expenses for the rest of the month. This will allow you some freedom while staying within your budget.

Stop, Think, Spend Strategy

This simple strategy will keep you from overspending. Stop before you go to the checkout counter. Think about what you’re buying. Go over a few questions in your head to get yourself to be in the moment. No justifying the clearance cost or the unnecessary stuff.

Tips for using Spending Strategy:
Some sample questions you can either keep in mind or have a list in your wallet (ideally in front of your credit or debit card)

Is it a need or want?

Can you use something else in place of the item you’re going to purchase?

Can you find a better price elsewhere?

Only after you’ve given it the stop and think then and only then is it time to spend.

Lists, Lists, and More Lists

One of the best strategies I have is to always shop with a list. I keep running lists on my phone and in a notebook I carry. This includes everything we need and things I’m looking out for-like a new pair of curtains and the budget I have for those items. If it’s not on the list we don’t purchase it. This keeps me from impulse purchases (my weakness!) and allows me to keep track of things we need that may not be at the forefront of my mind.

Tips for using Lists:
Use your phone or a dedicated notebook to keep track of your lists. There are plenty of apps that work great for this including Notes (on iPhone), Moleskine’s app, and Taasky.

Unwanted Expenses

We all have things in our budget we’d rather not spend money on-not the things we have to (like home repairs), but expenses that come from a lack of time management or organization. Some examples include; late fees, parking tickets, monthly contracts, or convenience fees. It could be you forgot to return your library books or you needed to pay a bill online that day and had to pay a $3.95/fee. You may have signed up for a ‘free’ trial and forgotten to cancel. While these may seem like small time they can add up if you aren’t careful.

Tips to Avoid Unwanted Expenses:
Avoid unwanted expenses when possible, but also make sure to have some room in your budget (Misc. category) for paying off those unwanted expenses now. To keep from making the same mistake again you can set reminders in your phone or have notes on your planner for due dates and mark down the day you should cancel a ‘free trail’.

Cutting the Cable(s)

One expense most families have is their cable bill. It can add up to more than $150 with internet access, cable channels, premium channels, DVRs, and a home phone. That’s a lot of dough! While internet access may be a requirement at home cutting the cable or dumping the home phone are both ways you can save big bucks.

Tips for Cutting the Cable:
Cutting the cable doesn’t mean never watching TV or movies! You can get a membership to Netflix, use Hulu, HuluPlus subscription, or Amazon’s Prime to stream movies and TV for cheap or free. The best part is you aren’t in a contract so you can cancel or ‘pause’ your membership at any time.

Reducing Interest Payments and Debt

The best way to reduce your expenses is to cut back on interest and debt payments. After all, saving more doesn’t make sense if you’re spending 10% or more on interest payments or more a large percentage of your earnings on debt. Debt isn’t all bad-it may allow you to pursue higher education, purchase your home, or finance a business. Revolving debt, loans, and high interest rates are an expense we should fight to eliminate.

Tips to Reduce Interest:
While you’re working to pay off debts you can reduce interest rates by:

refinance your mortgage-you may be able to refinance for a lower interest rate

With the new year in full swing, you may be noticing that your paychecks are a little smaller than they were last year. Social Security taxes were raised by 2% which may not sound like a lot, but this can truly impact families who are already financially strained or striving to build their savings & retirement. Today I want to share with you 5 ways to offset that 2% tax increase so that your family can prepare for this adjustment to your budget.

Let’s break down what a 2% tax increase might look like:

If you earn $30,000 per year, you will pay $50 more per month in taxes.

If you earn the national average of $41,000 per year, you will pay $64 more per month in taxes.

If you earn $50,000 per year, you will pay $83 more per month in taxes.

For the families that are already struggling, $50-64 a month is a huge chunk out of their budget that could go towards food, utilities, and housing.

Here are five easy ways to offset that 2% tax increase. These are all relatively painless, but yield an incredible amount of savings over the course of your year.

Ditch Your Cable Bill

Last year our family gave up cable television and it is has truly been one of the most financially rewarding and best things I have ever done for our family. We now rely upon Hulu & Netflix for our television watching, reducing our bill from almost $100 a month to under $20 monthly. We are still able to watch all of the shows we want, but we don’t find ourselves wasting hours and hours of our day consumed with the television. The other financial bonus is that we are not exposed to endless commercials, which can send you running to the stores to pick up the latest and greatest things. To learn more about alternative options to cable, be sure to read my article on ditching your cable bill.

(Monthly Savings: $80 or more)

Calculate Your Personal Latte Factor

David Bach, author of Debt-Free for Life coined the term “Latte Factor,” to describe the way small indulgences and expenses add up to a lot of money down the drain. Consider the example of a three-day-a-week Starbucks habit. At $3.80 a latte you will spend $11.40 a week, $45.60 a month, $547.20 a year, and $5, 472 over a ten-year period on JUST take out coffee.

You may think, “I don’t buy takeout coffee,” BUT we all have small drains on our budget that can add up over time. That dinner that you pick up at the drive-through each week because your kids have sports activities, the trip to the store for one item that turns into a cart full of junk, even our thrifty endeavors (like thrift and garage sale shopping) can cost us $10 or more a week.

Figure out what that drain is on your budget and stop the leak. One little change like whipping up your latte at home, setting your slow cooker in the morning on busy days, or allocating time towards organizing items you already have instead of buying more can easily save you $10 or more weekly!

Get Savvy About Grocery Shopping

When families ask me how to save their family money, the first thing I talk to them about is rethinking their grocery shopping. We all get in habits and ruts when it comes to grocery shopping. Do you buy the same box of cornflakes you grew up on? Do you refuse to try a generic ketchup because you truly believe a certain company is the only one who can make ketchup? Do you have a habit of shopping without a list? Do you find yourself making multiple trips because you didn’t execute your menu plan well for the week?

I highly recommend downloading the free Grocery IQ app for your phone to effortlessly make a grocery list for your family. It pulls the coupon savings for you and you can use your lists from week to week instead of starting a fresh list each time.

Instead of shopping multiple stores, search fliers from all of the grocery stores and jot down the best deals of the week. Take this list with you to Walmart, for example, and have them price match the items for you. You will not only be able to cherry pick the best of the best, but you also will experience the savings of not spending on gas to shop at multiple stores.

To make effortless menu plans to go along with the savings, be sure to visit our Take Five Fridays each Friday on the Facebook group to get 5 budget-friendly meals to create in your kitchen!

(Monthly Savings: $40 or more)

Declutter Your Way to Savings

Clutter not only weighs us down physically, but clutter causes us to spend money when we don’t need to. One look at a cluttered pantry or bathroom closet and you know exactly what I am talking about. Duplicate purchases occur when we don’t have a strong grasp on our inventory in our home and clutter hides us from the real treasures that are in our lives.

Think of clutter not only as the items that fill our home, but also the items that fill our fridges. Do you constantly throw food out because you have “too much” food in your fridge or pantry? Is your freezer full, but you still run to the store because you have, “nothing to eat.” I can raise my hand to these scenarios too and there is a sickening feeling in my stomach when I know that I haven’t done a good job managing this aspect of managing the family finances.

Accountability of our items brings enormous savings and satisfaction. Being a good steward of the stuff that fills your life forces you to edit your belongings and keeps you from buying as much. I try to live my life by the infamous quote from William Morris, “Have nothing in your home that you do not know to be useful and believe to be beautiful.” If it is not bringing beauty or usefulness to my space, then I can feel good about passing those items on to someone else in need.

I often hear that people think their home is “too small,” but I also often wonder if the excess from their lives was removed if that space wouldn’t feel spacious once again. When my home is decluttered, suddenly, my kitchen counters feel spacious, the basement really does have a spot for everything in storage, and the house really does have enough space for us all.

I honestly consider cutting the clutter as, not only a way to decrease buying duplicate purchases, but as a project to devote my time to rather than spending it out in the stores spending money. When that boredom spending starts to hit me, I focus on a spot in our home that needs to be reclaimed. Even in a smaller home, there are MANY corners to devote my efforts to.

Get the Good Life For Less

The entire focus of my first book, “The Good Life for Less,” is truly about achieving good times and a happy home on a budget. The book is filled with make-your-own recipes for commonly purchased items like food mixes and cleaners, as well as outlining simple ways any family can save money on their family budget each week.

In it, I outline how our family paid over $13,000 in credit card debt from unemployment and are on the road to financial freedom. Our family is living proof that any family can pay down their debt with small switches.

The switches I outlined above, are switches that we worked towards and have freed our family of credit card usage and have allowed us to have a beautiful life that is well within our means. You can find my book on the shelves of your local Walmart store or purchase it online!